Exhibit 10.1
EXECUTION COPY
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT
(hereinafter the “ Agreement ”) amended and
restated effective November 14, 2008 by and among RAM Holdings
Ltd., a Bermuda exempted company (“ Holding ”),
RAM Reinsurance Company Ltd., a Bermuda company (the “
Company ”), and Vernon M. Endo (the “
Executive ”).
WHEREAS, Holding and the
Executive previously entered into an Employment Agreement dated as
of November 1, 2003 (“ 2003 Agreement ”);
and
WHEREAS, Holding, the Company
and the Executive (collectively referred to as the “
Parties ”) entered into the First Amendment to the
Employment Agreement, effective August 10, 2005 (the “
First Amendment ”); and
WHEREAS, Holding and the
Company each desiring to secure the services of the Executive for
an additional term, and the Executive desiring to accept such
employment, entered into an Amended and Restated Employment
Agreement dated as of April 26, 2006, embodying the terms of such
employment (the “ 2006 Agreement ”);
and
WHEREAS, Holding, the Company
and the Executive wish to continue the employment relationship
under this Agreement on the terms and conditions hereinafter set
forth, as amended to comply with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Parties agree
that, except as otherwise specified herein, the terms of the
Agreement contained herein shall supersede and replace in its
entirety the terms of the 2003 Agreement, the First Amendment and
the 2006 Agreement; and
WHEREAS, the Executive and
the Company each hereby acknowledge that a valid work permit for
the Executive has been obtained from the Bermuda Department of
Immigration permitting him to perform his obligations
herein.
NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein
and for other good and valuable consideration, the receipt and
adequacy of which are mutually acknowledged, Holding, the Company
and the Executive agree as follows:
1. Definitions
. For purposes of
this Agreement, the following terms shall have the following
meanings:
(a) “ Base Salary
” means the salary provided for in Section 4 or any increased
salary granted to the Executive pursuant to Section 4.
(b) “ Boards ”
means the Boards of Directors of Holding and the
Company.
(c) “ Cause ”
means: (i) the Executive’s commission of any felony; (ii) the
Executive’s gross negligence, willful malfeasance or gross
misconduct in connection with his employment hereunder; (iii) a
substantial and continual refusal by the Executive in breach of
this Agreement to perform the duties, responsibilities or
obligations assigned to the Executive pursuant to the terms hereof;
(iv) the Executive’s failure to fully cooperate with a
regulatory investigation involving Holding, the Company or any of
its Subsidiaries or affiliates; or (v) any one or more acts by the
Executive of dishonesty, theft, larceny, embezzlement or fraud from
or
with respect to Holding, the
Company or any Subsidiary. By way of example, termination from
employment necessitated by the Executive’s inability to
maintain a valid work permit from the applicable Bermuda
governmental authorities after the Executive has used his best
efforts to maintain such permit or in connection with a Change in
Control does not constitute termination for Cause. Notwithstanding
the foregoing, a termination shall not be treated as a termination
for Cause unless Holding or the Company shall have delivered a
written notice to the Executive within thirty (30) days of the
actual knowledge of a majority of the members of the Holdings Board
of the occurrence of one or more of such events that may give rise
to a termination of employment for Cause and, for an event
described in item (iii) above, if capable of being cured, shall not
have been cured by the Executive within thirty (30) days of the
receipt of such notice and, for an event described in item (iv)
above, shall not have been cured by the Executive immediately after
receipt of such notice. If Holding or the Company has provided the
notice described in the preceding sentence to the Executive on at
least two separate occasions which involved substantially similar
behavior, Holding or the Company may immediately terminate the
Executive’s employment for Cause upon the occurrence of a
third similar event without regard to the notice and cure period
described in the preceding sentence.
(d) “ Change in
Control ” means: (i) the acquisition by any person,
entity or “group” (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended), other than by The PMI
Group, Inc., of fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of Holding or the
Company; (ii) the merger, amalgamation, reorganization, or
consolidation of, or share exchange involving Holding or the
Company, as a result of which the shareholders of Holding or the
Company immediately before such transaction do not, immediately
thereafter, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power entitled to vote generally in
the election of directors of the merged or consolidated company;
(iii) a sale of all or substantially all of Holding’s or the
Company’s assets; and (iv) approval by Holding or the Company
of the liquidation or dissolution of Holding or the Company, other
than a liquidation of the Company into Holding.
(e) “ Code ”
means the Internal Revenue Code of 1986, as amended.
(f) “ Cost of Living
Allowance ” means the amount paid to the Executive under
Section 7(e).
(g) “ Disability
” means the Executive’s inability to substantially
fulfill the positions, duties, responsibilities and obligations set
forth in this Agreement because of physical, mental or emotional
incapacity that entitles the Executive to long-term disability
benefits under the Company’s disability plan or
policy.
(h) “ Effective Date
” means April 26, 2006.
(i) “ Good Reason
” means a termination of the Executive’s employment by
the Executive for one or more of the following reasons: (i) a
reduction in the Executive’s Base Salary, Cost of Living
Allowance or the target bonus opportunity described in Section 5,
(ii) Holding’s or the Company’s removal of the
Executive from his position as the President and Chief Executive
Officer of Holding and the Company, (iii) a material breach of this
Agreement by Holding or the Company, (iv) a material diminution in
the Executive’s duties or the assignment to the Executive of
duties that are not materially consistent with those customarily
assigned to the President and Chief Executive Officer of a company
of the size and nature of Holding or the Company or which do, or
would be reasonably expected to, materially impair his ability to
function as the President and Chief Executive Officer of Holding
and the Company,
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(v) a relocation of the
corporate headquarters away from Bermuda, (vi) the refusal of a
purchaser of all or substantially all of the assets of Holding or
the Company to continue the Executive’s employment with
substantially the same position, title and responsibilities and at
least the same compensation as described herein, or (vii) the
Executive’s inability to maintain a valid work permit from
the applicable Bermuda governmental authorities after the Executive
has used his best efforts to maintain such permit. Notwithstanding
the foregoing, a termination shall not be treated as a termination
for Good Reason (i) if the Executive shall have consented in
writing to the occurrence of the event giving rise to the claim of
termination for Good Reason, or (ii) unless the Executive shall
have delivered a written notice to the Holdings Board within ninety
(90) days of his having actual knowledge of the occurrence of one
or more of such events stating that he intends to terminate his
employment for Good Reason and specifying the factual basis for
such termination, and such event, if capable of being cured, shall
not have been cured by Holding or the Company within thirty (30)
days of the receipt of such notice.
(j) “ Holding Board
” means the Board of Directors of Holding.
(k) “ Party ”
or “ Parties ” means Holding, the Company and/or
the Executive.
(l) “ Person ”
means any individual, corporation, partnership, limited liability
company, joint venture, trust, estate, board, committee, agency,
body, employee benefit plan or other person or entity.
(m) “ Proceeding
” means any threatened or actual action, suit or proceeding,
whether civil, criminal, administrative, investigative, appellate
or other.
(n) “ Standard
Benefit ” means any amounts earned, accrued or owing to
the Executive but not yet paid, and receipt of other benefits, if
any, in accordance with applicable plans and programs of Holding,
the Company or a Subsidiary, provided , however ,
that in no event shall the Standard Benefit be deemed to include
any bonus payments.
(o) “ Share Option
Plan ” means the RAM Reinsurance Company Ltd. Stock
Option Plan for Management Employees as Amended and Restated
Effective August 10, 2005, as may be amended from time to time, or
any successor plan, including but not limited to the RAM Holdings
Ltd. 2006 Equity Plan.
(p) “ Subsidiary
” means, with respect to Holding, any corporation,
partnership, limited liability company or other entity of which (a)
if a corporation, fifty percent (50%) or more of the total voting
power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors thereof is
at the time owned or controlled, directly or indirectly, by
Holding, or one or more of the other Subsidiaries of Holding, or a
combination thereof, or (b) if a partnership, limited liability
company or other entity, fifty percent (50%) or more of the
partnership, membership or other similar equity ownership interest
thereof is at the time owned or controlled, directly or indirectly,
by Holding, or one or more of the other Subsidiaries of Holding, or
a combination thereof. For purposes hereof, Holding and their
Subsidiaries will be deemed to have fifty percent (50%) or more
ownership interest in a partnership, limited liability company or
business entity if Holding and/or a Subsidiary is/are allocated
fifty percent (50%) or more of partnership, limited liability
company or other entity gains or losses or control(s) the general
partner, managing member or similar managing body of such
partnership, limited liability company or other entity.
(q) “ Term of
Employment ” means the period specified in Section
2.
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2.
Term of
Employment .
(a) Holding and the Company agree
to continue to employ the Executive under this Agreement, and the
Executive accepts such employment, for the period commencing on the
Effective Date and ending on March 31, 2009 (the “
Expiration Date ”). Notwithstanding the foregoing, the
Term of Employment shall be earlier terminated upon the termination
of the Executive’s employment, but only in strict accordance
with the provisions of Section 9.
(b) The Term of Employment shall
be extended automatically for one additional year beginning on the
Expiration Date (the “ Extension Date ”) and on
each anniversary of the Extension Date thereafter unless and until,
not later than six (6) months prior to the Extension Date or any
anniversary of the Extension Date, either Holding or the Company,
on the one hand, or the Executive, on the other hand, gives written
notice to the other Party that the Term of Employment shall not be
so extended. A termination of the Executive’s employment that
results from the expiration of the Term of Employment shall not be
treated as a termination of employment for any purposes under this
Agreement except as specifically noted herein.
3. Positions; Duties;
Responsibilities; and Place of Employment .
(a) During the Term of
Employment, the Executive shall be employed as the President and
Chief Executive Officer of Holding and the Company and shall be
employed in such other position or positions with Holding and the
Company as the Holding Board shall from time to time specify. The
Executive, in carrying out his executive duties under this
Agreement, shall report to the Holding Board. The Executive, during
the Term of Employment, shall be nominated for reelection to the
Boards at all elections to the Boards. The Executive shall receive
no compensation for his service on the Boards. The Executive agrees
to resign from the Boards upon termination of employment with
Holding and the Company. While employed by Holding and the Company
hereunder, the Executive shall perform his duties at the
Company’s offices in Bermuda; provided ,
however , that the Executive shall be required to travel as
reasonably necessary in carrying out his duties and obligations
hereunder. The Executive is required to work the hours and days
necessary to fulfill his executive duties under this
Agreement.
(b) Notwithstanding anything
herein to the contrary, nothing shall preclude the Executive from
(i) serving on the boards of directors of a reasonable number of
other corporations, subject to prior approval by the Holding Board
(which shall not be unreasonably withheld), or the boards of a
reasonable number of trade associations and/or charitable
organizations, (ii) engaging in charitable activities and community
affairs, including political activities, and (iii) managing his
personal investments and affairs, provided that such
activities do not materially interfere with the proper performance
of his duties and responsibilities as the President and Chief
Executive Officer or violate Section 13 of this
Agreement.
4. Base Salary
. Commencing as of
the Effective Date, the Company shall pay the Executive an
annualized Base Salary of $400,000 during the Term of Employment.
Such Base Salary shall be payable at intervals in accordance with
the regular payroll practices of the Company applicable to
executives, but no less frequently than monthly. The Holding Board
shall review the Base Salary no less frequently than annually
during the Term of Employment; provided , however ,
that the Base Salary shall not be decreased during the Term of
Employment below the amount set forth above without the
Executive’s consent (including, without limitation, for the
purpose of determining benefits due under Section 9). The Executive
is a professional or managerial employee whose Base Salary has been
calculated to reflect the fact that his regular duties are likely
to require him to work on occasion more than forty (40) hours a
week. Accordingly, no overtime shall be payable.
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5.
Annual
Incentive Awards . The Executive shall be
eligible for a combined annual incentive bonus award from Holding
and the Company in respect of each calendar year during the Term of
Employment. The Executive’s target annual incentive bonus
amount for each such year shall be an amount equal to 125% of his
annualized Base Salary for such year. The Executive’s actual
annual incentive bonus amount for each such year may be less than
or greater than the target amount depending upon the degree of
attainment of criteria, which shall be established by the Boards
(or committees of the Boards) in advance of each such year. The
Boards (or committees of the Boards) shall determine following the
end of each such year whether the criteria for such year have been
attained. The Company shall pay the Executive his annual incentive
award payment in respect of any year at the same time as bonuses
are paid to other executive officers of the Company, but in no
event later than fifteen (15) days after receipt by the Boards of
the audited consolidated financial statements of Holding and the
Company and, if applicable, their Subsidiaries, for the fiscal year
for which the bonus is payable and in no event later than the last
day of the calendar year following the calendar year for which the
bonus is payable.
6. Long Term Incentive Plan;
Share Option Award . During the Term of
Employment, the Executive shall participate in the Share Option
Plan. Subject to the terms of the Share Option Plan and any
applicable share option agreement, the number of shares subject to
the option and the exercise price per share may be adjusted in the
event of a stock split, reverse stock split, reorganization,
recapitalization, or other similar event described in the Share
Option Plan and/or any applicable share option agreement. The
Executive shall be eligible for other or additional long-term
incentives in the discretion of the Holding Board (or a committee
of the Holding Board). Such other or additional incentive award(s)
shall be on a level, and on terms and conditions, that are
commensurate with his positions and responsibilities at Holding and
the Company and are appropriate in light of corresponding incentive
awards to other executives of Holding and the Company.
Notwithstanding anything herein to the contrary, the option grant
provided for in Section 6 of the 2003 Agreement shall be subject to
the terms and conditions of Section 6 of the 2003
Agreement.
7. Other Benefits
.
(a) Employee Benefits
. During the Term
of Employment, the Executive shall be eligible to participate in
all employee benefit plans, programs and arrangements made
available generally to Holding’s and the Company’s
executives in accordance with the terms and subject to the
conditions of such plans, programs and arrangements, including,
without limitation, share option, profit-sharing, savings
(qualified and non-qualified) and other defined contribution
retirement plans or programs, medical, dental, hospitalization,
vision, short-term and long-term disability and life insurance
plans or programs, accidental death and dismemberment protection,
travel accident insurance and any other employee welfare benefit
plans or programs that may, from time to time, be sponsored by
Holding, the Company or by a Subsidiary for the benefit of the
Holding’s or the Company’s employees, including any
plans or programs that supplement the above-listed types of plans
or programs, whether funded or unfunded; provided ,
however , that nothing in this Agreement shall be construed
to require Holding, the Company or a Subsidiary to establish or
maintain any such plans, programs or arrangements, or to prevent
Holding, the Company or a Subsidiary from terminating any such
plan, program or arrangement in accordance with its terms, except
as required by Bermuda law.
(b) Perquisites
. During the Term
of Employment, the Executive shall participate in all fringe
benefits and perquisites available to executives of Holding and the
Company at levels and on terms and conditions that are commensurate
with his position and responsibilities at Holding and the Company.
The Executive shall also receive such additional fringe benefits
and perquisites as Holding and the Company may, in their
discretion, from time to time elect to provide.
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(c) Vacation, Holidays, and
Leave .
During the Term of Employment, the Executive shall be entitled to
vacation, holidays, and leave in accordance with the reasonable
practices of Holding and the Company and as required by Bermuda
law.
(d) Annual Travel
. Each year during
the Term of Employment, the Executive shall be provided four (4)
round-trip tickets between Bermuda and the east coast of the U.S.,
such tickets to be paid for by the Company and used by the
Executive and three other passengers of the Executive’s
choice.
(e) Cost of Living
Allowance . During the Term of
Employment, the Company shall pay the Executive a monthly cost of
living allowance of $18,000.
(f) Tax Treatment
. In the event
that, during the Term of Employment, there is an amendment to the
Code governing the taxation of income earned by, and/or cost of
living/housing allowances paid to, a United States citizen resident
in Bermuda that results in both the inclusion in the
Executive’s income subject to U.S. taxation of amounts paid
by the Company and not previously subject to such taxation and a
decrease in the combined net after-tax Base Salary and Cost of
Living Allowance of the Executive, the Company shall increase the
amount payable hereunder to the Executive as Base Salary and/or
Cost of Living Allowance, as applicable, by an amount such that,
with such increase, the combined net after-tax Base Salary and Cost
of Living Allowance payable hereunder equals the Executive’s
combined net after-tax Base Salary and Cost of Living Allowance
payable hereunder immediately prior to the effective date of any
such amendment to the Code.
8. Reimbursement of Business and
Other Expenses .
(a) The Executive is authorized
to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall
promptly reimburse the Executive for all such expenses, subject to
documentation in accordance with reasonable policies of Holding and
the Company.
(b) Upon presentation of
appropriate vouchers or other expense statements, during the Term
of Employment, the Company shall pay for personal tax advice and/or
tax return preparation for the Executive (up to a maximum of $7,500
per year).
(c) The Company shall be
responsible for 100% of any Bermuda payroll taxes a
